A sizable call spread on Citigroup Inc was adjusted on Monday in whatappears to be a trader positioning for shares to potentially move higher in thelong term. Citi shares rose 1.07 percent to $39.43 late on Monday.

On the options front, a June 2013 $42-January 2014 $50 call spread traded onthe bank at 37 cents, 30,000 times, said WhatsTrading.com options strategistFrederic Ruffy. The spread appeared to involve the purchase of the higher Jan$50 strike call against the sale of the lower June $42 strike call. Ruffy notedthe open interest in the June $42 strike calls is 67,562 contracts and Monday'saction might close out half of positions, at $2.38 per contract, opened in lateSeptember when 60,000 June $42 Citi calls were bought for $1.15 apiece.

"The flow at that time was apparently rolling out of June $32 calls -- aposition that dates back to mid-July when shares were in the mid-20s," Ruffysaid. "By rolling to the January 2014 $50 calls, today's investor seems to beexpressing confidence in the stock for 2013 as well."

A pullback in the shares of Watson Pharmaceuticals Inc on Mondayappears to have created an opportunity for call traders to position for upsideexposure. Watson shares dropped 3.43 percent to $85.98 near midday and optionvolume on WPI consisted of 4,948 calls traded thus far against 366 puts, or 12.7times the combined daily average, according to Trade Alert.

"Watson Pharmaceuticals dropped to its 100-day moving average today, andbuyers are stepping in," said optionMonster analyst David Russell in comments onthe firm's website. OptionMonster systems detected the purchase of about 3,000January $90 strike calls for 40 to 55 cents apiece, with most of the contractspricing at the higher price. In all, Trade Alert data show 3,760 contractstraded in the strike, above its previous open interest of 1,116 contracts.

The company said on Friday it has applied for U.S. approval to market ageneric version of Velcade, a treatment for multiple myeloma made by TakedaPharmaceutical Co.

Option traders appear to be hoping to catch gains in the share prices ofU.S. mobile service provider AT&T Inc and rival Verizon Communications Inc by the end of this week. Shares of AT&T rose 17 cents to $33.49 whileVerizon Communications slipped 8 cents to $42.82.

In all, 4,471 contracts now traded in the strike with 97 percent of theactivity on the ask price against 2,204 in open interest and it appears to bebuying, Ruffy said. The Weekly $33.50 and $34.50 strike calls on AT&T, alsoexpiring on Friday, have attracted interest. In addition, traders favoredVerizon's Weekly Jan. 4 $43.50 strike calls, Ruffy said. That strike carriedvolume of 2,792 contracts with the majority on the ask price, indicatingbuyer-fueled activity. "It's not clear why investors are dialing up bullishtrades on the two Dow components, but the flow seems to reflect expectations forgains in the shares through the rest of this week," Ruffy said.